Super funds “milked:” Report

Want to get more from your super?

If so, you might be wise to look at an industry superannuation fund, instead of one of the commercial funds.

A new report, admittedly funded by the industry superannuation network, raises some interesting points.

The industry funds, of course, were started by Australia’s unions.

So you would have to be eligible, to join a particular fund.

However many workers who are eligible to join one of these funds have not done so.

In fact, the report says, more than 4 million Australians workers, who would be eligible, have joined a commercial fund instead.

And, it adds, each of them is paying hundreds of dollars a year in commissions, mostly for financial advice that they do not receive.

These payments are known in the trade as trailing commissions.

Industry funds do not charge commissions of this kind.

Does this matter all that much?

Yes it does, the report says.

“Fees and commissions paid by retail fund members could cost someone on average wages more than a year’s  salary over their working life,” it concludes.

Then it adds”The more you pay for super. the less you get.

“On average, for each additional 1 per cent paid in fees, members of the largest public offer funds lost almost 1.5 per cent in net returns.

“Since 1996, more than $40 billion has been lost from Australian workers’ super accounts, due to their accounts being silently milked by commissions,” the report says.

The entire superannuation industry is being overhauled at present, with the Federal government working on a raft of new reforms.

This follows the payout shocks that many older Australians suffered after the stock market crash.

The report, though, strongly suggests that those who can shift to an industry fund would be wise to consider doing so, before the new reforms take effect.

How, though, do the industry funds perform, financially?

The report claims that they have done better than the retail funds in nine of the past 10 years.